Rambling, rumbling, rumination

Looking at the Long Term

I posted over here and over here about the subscription model of monetizing MMOs. I have a long-standing antipathy for the model, but then, I’m the sort that thinks gym memberships are idiotic, too. There’s this odd mindset that some people have that paying a subscription (sign up and forget about it) is the best way to pay for something you want. Whether it’s a service (cable TV, MMOs, whatever) or a product (cars, consumer electronics, houses), the trouble is the same; a focus on the here and now masks the long-term cost. Ignoring the long term is dangerous and costly.

The subscription model mentality is the same sort of mentality that led to the insane focus on the “monthly payment” numbers when looking at the “cost” of big ticket items like cars and houses. That focus on the “just a little hit now” without really looking at how it adds up in the long run is what has driven the U.S. economy to the edge of collapse. (Housing’s severe distortion being a catalyst to kick the house of cards that is our financial/banking system.) There are a lot of other systemic troubles with our economy, but the short-term focus of politicians, consumers and everyone in between is a philosophical underpinning to many of the problems.

This phenomenon is especially egregious when it comes to physical goods, since they are bought via “financing” or loans, which carry interest costs. The longer the payment is prolonged, the more interest is generated. Buying a home with a typical thirty year loan actually winds up costing the buyer twice or even three times the original loan amount when all is said and done, because of interest. Some house loans are even being extended to forty years. They actually do reduce the monthly payments, but the overall cost goes up because the interest gets to generate for longer. Thing is, so many consumers are focused on the moment that they don’t really look at the long term cost, and they wind up spending a LOT more than they really need to in the long run.

When an MMO player pays for the privilege of playing the game, they are paying a service cost. To some degree, this makes sense, as there is a physical cost of maintenance for both servers and personnel. There’s no way around that element of online gaming, and philosophically, it makes sense to charge consumers for that. The trouble is, that element of the cost of gaming is going down as technology improves. That’s a function of Moore’s Law and the productive side of capitalism (advancements reduce costs and improve performance).

Looking at a different monetization model, the microtransaction model, we run into some similar concerns, and some different concerns. Complaints about the microtransaction model are mostly framed in a “nickel and diming” argument. It’s a valid complaint, and people can indeed get themselves in trouble spending in small amounts, if it’s done frequently enough and in enough volume. Thematically, though, the difference between subscription and microtransactions is similar to the difference between forty year loans and thirty year loans. The cost is just distributed differently, and made more palatable through marketing. The “nickle and diming to death” strategy hasn’t been averted by subscribers, they are just being “ten and fifteen dollared to death”.

The comparison isn’t perfect, since some microtransaction goods are durable or perpetual, where the sub model is just an “access to service” model. When we compare the sub model to something like Guild Wars, though, the differences are more stark. It could be argued that the ultimate cost of playing GW plus expansions is much like the sub model if (and it’s a huge if) a player keeps up with the expansions at roughly the same pace they would have played through sub content. That misses a huge part of cost evaluation over the long run, though. When a player buys Guild Wars, they can play free forever. (Or for as long as the servers hold up and the company honors the agreement, I suppose.) The player has purchased the game, and they can play it as much as they want for as long as they want. That’s a huge distinction.

The longer the term, the better the cost/benefit ratio of Guid Wars, and the worse the cost/benefit ratio of a service-based subscription. (That’s why I think gym memberships are idiotic; paying in perpetuity merely for access to something that doesn’t change is throwing money away in the long run.)

So what? Paying for service makes some sense, right? Sure. When we look specifically at MMOs, though, what exactly are designers and players expecting? What is the life span of the game? The promise of the MMO genre is that of “persistent online worlds”. Persistent. How are we understanding that word? Persistent as in “always online (barring maintenance), always remembering and tracking”, or something more like “perpetual” persistence. It may be linguistic gymnastics, but really, what do we mean by “persistent” in the context of an MMO?

I think that at some level, people expect their online game assets to persist perpetually. This is especially true if players have spent any time grinding through a loot/level treadmill and have an emotional investment (as well as a monetary investment) in their characters/virtual assets. That’s part of the promise of an MMO; that its a “virtual world” that players can get invested in. There’s a bit of cognitive dissonance going on there, where players expect that they are investing time and money into something that will be valuable in the long run (a commodity of some sort), but they are paying for a service. WoW players, for example, take inordinate pride in their shoulderpads of doom or what have you. Their stuff, in other words. Yet, they are paying through the nose for the service of playing the game.

The subscription model, then, hoodwinks players into paying for time to play, with the underlying game design promise of getting stuff as a result of their investment. It’s a classic bait and switch, but it’s so subtly enforced that by the time a player is heavily attached to their character and their virtual stuff, the best thing to do is to maintain the subscription to maintain the access.

With something like Guild Wars, you buy the game, and you can have access to your stuff whenever you want, long term or no. The impetus to spend more money on that game is to get more content, not to maintain access to content you’ve already paid for. That’s a critical distinction.

It’s the trouble with a “service economy”: there really isn’t much of value being offered. It’s not a productive economy that makes progress in the long run through construction and refinement, it’s an economy that stagnates and sits back earning passive, parasitic income based on providing access and maintenance to existing assets. Not only am I ethically strongly opposed to parasitic passive income (interest), but it is a long term liability for a society. The money (in the form of interest) that goes to the land barons, financiers and investors is not being productive in making that society a stronger, healthier organism, prepared for shocks (disaster management, which requires emergency funds) and survival (long term viability). Interest naturally forces money to flow upstream to those who merely had more to start with.

I’m not a socialist, but it’s just common sense to kill leeches and eliminate liabilities if you want to keep a system alive, thriving, and maybe even growing. A service economy ultimately falls apart as nothing of value is created for the long term.

Now, to be fair, if the subscription money is folded back into the game, to make it better via infrastructure improvements and such, a subscription model can work. That is, the sub money is split to pay for the recurring costs of maintenance, and most importantly, in investment to make the game itself better. It’s very much like a country spending tax money on new roads and such, rather than paying interest on national debt.

In the case of WoW, the “old world” is almost unchanged over the last four years. There is no good reason to keep paying premium costs to merely maintain access to old content. Specifically in this case, I suspect that Blizzard is using the sub money from WoW to finance their other projects. That makes sense from their point of view, but it’s disengenuous when it comes to billing customers. Subscribers are paying for the development of other games that the company is working on, rather than actually paying for the game that they are actually paying to play.

That’s good for the long-term viability of Blizzard, and ultimately, I’m actually sort of happy to help them avoid getting costly loans. In an ideal business, current success and profits do pay for future development. (Instead of financing development via loans and later losing profits to interest on said loans.) That’s how a capitalism market should work, via capital, rather than “financing”. The part that bugs me about it is the lack of transparency regarding where the money goes, and the neglect of a game that, at least on the surface, is a place to live, rather than a game to finish. It’s a philosophical disconnect; the World of Warcraft (and any MMO) is marketed as an interesting place to spend time, in any location of the game, but it functions like a standard dungeon crawler with multiplayer. It strikes me that Blizzard is monetizing the service more than the creation, and that’s what bugs me.

A service economy is inherently unstable for the long run, and it’s not good for the consumer. Long term spending needs to be built around creation of durable assets, rather than consumer goods and services.